Every day, we are going to feature select comments from Phil's Premium Member Chat. This will give our Seeking Alpha readers an exclusive inside look at what the Members see at PSW live every day. If you are interested in signing up for a Premium Membership, you can use THIS LINK for a 20% first-time discount.
Our final featured comment of the day was Phil's Afternoon Chart for Members:
Phil - June 2nd, 2010 at 12:50 pm |
Critical numbers/Fizz - I don’t usually worry about stock-specific numbers but it is a serious issue on indexes. On my 5% Rule, we throw out spikes and, frankly, I think it’s always a good idea to throw out spikes adn that maens that 6,451 on the NYSE is a meaningless bit of data as it didn’t even last an hour. Going back to March, it’s the 6,650 line that seems to firm up as a serious support and that’s right what we bounced off today. If we look at the NYSE topping out at 7,500 (thowing out all of April’s silliness) then a 10% move down is 6,750 on the button and 5% is 7,125, which is currently the 200 dma. Since the NYSE bottomed out (ignoring spikes) at 5,000, 7,500 is a logical spot for a top and that 2,500-point run has a logical pullback of 20% to 7,000. Since we topped out at 10,000 on the NYSE, I am pretty comfortable using these levels as major indicators and that leaves us looking at 6,750 as a "must hold" line, 7,125 as "improving" and 7,250 as our recovery zone that takes us up to a new trading range.
Below 1%/SNS - At this point, I think even blowing our current bounce support would be a bad sign. Dow 10,150, S&P 1,085, Nas 2,250, NYSE 6,750 and RUT 650. Not holding those into the close is going to be a real sign of weaknes. Where we are right now is nothing more than the top of the decending channel I drew out in yesterday’s chat.
HOV is not an earnings play, Dilbert. HOV is longer-term. I’m not very excited by tonight’s other earners but JOYG and STP report tomorrow morning and those should be fun.
JOYG has very low expectations for earnings but I think the Q was good, it’s the outlook that concerns me. Fortunately, it also concerns a lot of people so I do like selling the July $45 puts for $2 and the July $55 calls for $2.65 while going long with Oct $60s at $3.60. This is similar to the AAPL play but we’re adding the puts as they are rollable and JOYG is a nice little company to get stuck with long-term, even if they miss. To the upside, you can’t lose on the caller without beating the putter and then it’s a rolling game that puts us net positive on the stock wit a -$1.05 basis on the $5 spread with 3 months to roll.
STP is another beaten-down solar play and they report tomorrow morning. They are a Chinese ADR and China is pushing alt energy stimulus so I expect nice noises from management but this is a very speculative play that we take the money and run on if all goes well: $9 puts can be sold for .47 and that can offset the purchase of the $9 calls at $1 but, if this goes badly, you end up owning STP for net $9.53, about the current price so be careful!
Disclosure: Positions as indicated but subject to change